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WORK AND INVESTMENT AND CORPORATE WELFARE

May 1, 2015

WORK AND INVESTMENT AND CORPORATE WELFARE

Ever wonder where your tax money goes? We know that the so-called defense budget swallows a huge swath of it (more than the next 23 countries in the world combined) as we protect many of such countries (and their budgets) from paying for their own defense. We also know that the usual appropriations are made to fund government operations in such areas as basic R & D, disease control, paying Supreme Court justices etc., but guess where about $150 billion per annum of your tax money is currently going (according to the Berkeley Center for Labor Research and Education at the University of California)? It is going (along with tax loopholes and other such tax and bankruptcy goodies) to corporate welfare. Here’s how, per a May 1 editorial of the New York Times (and many blogs I have authored over the years).

Work no longer results in a decent paycheck and a rising standard of living in this country. The portion of the economic pie (as I have often blogged) that goes to working people is currently askew as the one percenters hog 95% of the economy’s income and new wealth while workers are mired in a decades-long economic malaise in which family median wages (as adjusted for inflation) are either stagnating or even falling. Given such a successful greedy grab of the economy’s income and new wealth, it is not surprising that marginal productivity gains of labor have also not shown up in wage gains but have rather flowed into executive compensation and shareholder returns as well. The one percenters have therefore siphoned 95% of the economy’s income, the economy’s new wealth and even gains that came from the enhanced marginal productivity of their workers into their own overflowing coffers while you and I sit here and watch it happen.

One would think that such grabs are enough, but as it plays out, the one percenters in yet another greedy grab even make an additional $150 billion per annum out of the taxpayers’ pocketbooks with which to bolster executive bonuses and prices of their stock (which enhances capital gains opportunities for investors), and here’s how they do it. They foster wage inequality by grossly underpaying their workforce, which in turn means that the working poor and even middle class workers must rely on public assistance programs such as Medicaid, food stamps and low-earner tax credits in order to keep body and soul together, all to the tune of $150 billion per annum.

You and I as taxpayers are thus providing an annual bonus of $150 billion to the one percenters for grossly underpaying their workforces, i.e., we are for all intents and purposes paying $150 billion a year in “wages” as substitute “employers” that the one percenters should be paying but for their unbelievable greed and our failure to do anything about it. How did we ever arrive at such a state of affairs? Why do we finance greed with taxes? Are we awake? Is Congress? Is anybody? Are we FOR wage inequality as good public policy? Apparently; we are subsidizing it.

The answer and the solutions are not complicated. We know that a healthy economy requires that wages and the marginal productivity of workers rise in tandem, so why hasn’t that happened (as it did from New Deal days up to circa 1974 when workers sometimes had raises in wages that were even greater than their marginal productivity (which gave rise to a booming economy and building of a robust middle class in that day and age).

It hasn’t happened because Congress has failed since circa 1974 to adequately update the minimum wage scale and other labor standards such as overtime pay, employee benefits and union organizing. Low-wage employers pay low wages because they can, and their failure to pay living wages has had consequences that run far beyond the harm done to their low-wage workers. For starters, they are taking billions of dollars of our tax money to swell their bottom lines, as seen above, but it goes even further than that. As I often blog, corporate failure to pay living wages depresses aggregate demand in the marketplace so that the resulting malaise affects all of us adversely (in addition to our $150 billion dollar payout to corporate greed mongers), and just think of all the school and infrastructure repair and renewal $150 billion could finance and the ridiculous waste of that money into corporate bottom lines for no good reason.

Some states have given up on our corporate-owned Congress and are proceeding to correct such wage distortions within their respective bailiwicks. A few states are considering ways to recover public funds from low-wage employers by, for instance, requiring payment of a fee to the state for each worker who makes less than $15 an hour. Indeed, starting in 2016, California will start publishing the names of employers that have more than 100 employees on Medicaid and how much these companies cost the state in public aid.

While such steps are encouraging, the problem cannot be solved by shaming. We need an activist Congress which will do something about depressed wages and its effects upon not only our budget (as seen above) but also the resulting depressed demand in our marketplace. This is a national problem, and we need our national legislature to take the bull by the horns and replace our outdated policies and political payoffs to corporate America with labor standards policies that reflect the realities of 2015. Corporations have to pay fair wages or we have to pay their workers to keep them alive. That’s the choice, and I have made mine.

If editorials of the New York Times and blogs such as mine add to public awareness of just how and why our tax dollars are being spent as they are in this connection and result in a clamor for the Congress to do something about it, and if Congress should end this very expensive piece of corporate welfare to underpaying corporations, then 99 percent or more of us will be better off. We don’t need shame as policy; we need tough statutes that reinstate labor protection standards for not just corporate workers but for the good of all of us, so let’s go.    GERALD     E

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